“There is no art which one government sooner learns of another than that of draining money from the pockets of the people.”
-Adam Smith, Wealth of Nations
The Big Three – Ford, Chrysler, and most of all GM – are in trouble again – well, not really “again”, they’ve been failing for the last decade to adapt to market realities. But now that all the big kids on the block are getting giant government bailouts, Detroit has settled on a “solution” – if Americans won’t buy their shoddily made, overpriced, gimmick-laden gas guzzlers, they’ll just have the government take money from the taxpayers instead! This is a great business model; with that kind of support they could quit the dirty business of making cars altogether and go into the lobbying-government-for-handouts business. Actually, they already have.
As if the Federal debt weren’t already high enough, our President-Elect is demanding seventy-five billion dollars for the failed U.S. auto industry – that’s $75,000,000,000, or $250 for every man, woman, infant, ninety-year old, prison inmate, and illegal alien in the U.S. – and you don’t even get a crappy used car for it. The interest on the bailout (at 4%) will cost the taxpayers three billion dollars a year, more than General Motors best-ever annual profits from its U.S. production.
And it’s a bailout, not a loan, pretenses not withstanding. Even if the government charged only the interest it has to pay (a zero-profit high-risk “loan”), there is little chance the automakers would ever be able to even catch up with the interest. There’s a reason they can’t borrow money from the private sector – it isn’t a lack of funds, it’s a lack of suckers. Historically, General Motor’s global profits from all operations have averaged less than two billion a year for the last decade, and even in the best of worlds it will be several years before they can recover to that level. Ford and Chrysler aren’t much better off. But even if payments started at four billion a year immediately, the “loan” would take thirty-five years to pay off. Can the Big Three stay in business for thirty-five years? Not unless they drastically change their way of operating – and why would they do that when the taxpayers are there to rescue them from their failures?
Twenty-five billion dollars was, allegedly, already earmarked for the automakers – but in fact this money was supposed to be for research into more fuel-efficient vehicles. This is retarded because plenty of research has already been done and we already know how to make vehicles that use less gas (make them smaller), but anyway that loan wasn’t intended to prop up a bankrupt company so it could keep on producing cars that people don’t want to buy (and paying fat executive salaries).
The reason that GM, Ford, and Chrysler are going to get a seventy-five billion dollar handout, when millions of unemployed Americans are struggling to eat, is simple: they’re unionized. The Democratic Party has a firm partnership with unions, which provide it with generous funding, and Democrats fill their end of the bargain by shoveling everyone else’s money down the union rat hole. Barack Obama, like any politician, is primarily concerned with paying off his own allies and supporters. Letting GM (and maybe Ford and Chrysler as well) go under would indeed cost some people their jobs, but bailing them out will ultimately cost a lot more jobs – those of people who actually work hard for a market wage and have trouble getting by, not union slackers who have savings and continuing benefits to fall back on.
Whatever union members do lose their jobs, it’s their own fault anyway. The greed of the UAW has painted the automakers into this corner in the first place; with their fat benefits, the auto workers make two or three times as much as they would otherwise. This might work alright if they took proportionate responsibility and worked conscientiously to turn out a quality product as efficiently as possible, but instead they have agreements protecting their jobs when they screw up and goof off. The worst thing about the UAW, though, is that it has deprived the automakers of flexibility. They can’t eliminate jobs that are obsolete, and they can’t shut down plants that are inefficient or unneeded without paying a fortune in benefits to the workers laid off. Inept management has its own role, of course, but the biggest single reason the Big Three are in trouble is that the UAW prevented them from cutting back production when sales declined.
With seventy-five billion dollars of your money, the union freeloaders can keep their “jobs” producing unwanted cars that will sell at a loss, and the Big Three can maintain their twilight existence, sucking the sustenance of the living to sustain themselves past their natural expiration date. There’s nothing whatever you can do to stop it, because the unions have bought the government. You won’t even get a kiss, except to kiss your money goodbye.